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The sign at eBay headquarters in San Jose, Calif. is photographed on Friday, April 19, 2013. The company has transformed itself from an online auction site into one of the most highly sought after technological partners for small and large retailers. (Gary Reyes/ Bay Area News Group)

Today: In explosive after-hours action, eBay (EBAY) announces that activist investor Carl Icahn is agitating for a spinoff of PayPal and Netflix (NFLX) shows off more strong subscriber growth for a big bump from Wall Street.

The Lead: eBay, Netflix jump in late trading following earnings reports

Shockwaves rippled across Silicon Valley after Wall Street closed up shop Wednesday, as earnings reports included big news: eBay announced that activist investor Carl Icahn was angling for a spinoff of PayPal, and Netflix stock soared after beating estimates for profits and subscriber growth.

San Jose-based eBay announced that Icahn had amassed roughly 0.82 percent of the company’s stock and put forth two employees as candidates for election to the board of directors. His ultimate goal: A spinoff of mobile payments company PayPal, which eBay purchased in 2002 for $1.5 billion and has nurtured into a huge business.

In response, eBay said in its earnings announcement that it “has explored in depth a spinoff or separation of PayPal,” but “does not believe that breaking up the company is the best way to maximize shareholder value.” eBay CEO John Donahue echoed that sentiment on Twitter, saying that he had spoken with Icahn on Wednesday, and “we believe (PayPal is) more valuable as part of @ebayinc.”

Icahn is known for heavily investing in companies and pushing for moves that will return profits to shareholders, with eBay representing his second Silicon Valley-based target of the day. Earlier, he continued his push for Apple (AAPL) to increase its share repurchases and announced that he had increased his holdings in the Cupertino tech giant to more than $3 billion.

eBay continued to show off strong financial growth, announcing profits of $850 million, or $0.65 a share, on revenues of $4.5 billion in the all-important holiday-shopping quarter, with profits rising 14 percent and revenues gaining 13 percent year-over-year. PayPal’s performance was extremely important to those numbers: The payment service provided revenues of $1.84 billion in the fourth quarter and $6.6 billion for the full year, both representing roughly 41 percent of eBay’s total.

eBay’s financial gains and Icahn’s involvement combined to push the company’s stock higher in late trading. After gaining 0.5 percent to $54.41 in Wednesday’s regular session, shares jumped higher than $58 after the bell, topping the company’s 52-week high of $58.04.

Netflix announced that it added 2.33 million subscribers in the United States in the final three months of 2013 and 1.74 million international customers, to boost its total subscription base higher than 44 million. That growth resulted in profits of $48 million, or 79 cents a share, on revenues of $1.18 billion for the quarter, and the company made sure to address recent concerns about its future.

A recent court ruling seemed to invalidate net neutrality rules, which sparked worries that Netflix or its customers would face fees in order to have its streaming service piped through Internet connections. Netflix CEO Reed Hastings and CFO David Wells acknowledged the concern in their letter to investors, writing, “in principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide.”

However, the executives said they do not expect to face such an issue, and if it happened, “we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.”

Netflix has also been testing different pricing plans for its streaming services that vary the number of devices that can stream the company’s content at the same time, which produced concerns that the company is ramping up for another dramatic change to its pricing plan similar to one that nearly ruined the company in 2011. Netflix addressed its plans in this regard, explaining that it eventually wants to offer three different streaming pricing plans and noting, in bold, that “existing members would get generous grandfathering of their existing plans and prices.”

Silicon Valley’s other major earnings report of the day was ho-hum in comparison, even as Milpitas storage company SanDisk completed a calendar year with massive revenue growth of 22 percent. SanDisk reported fourth-quarter profits of $338 million, or $1.45 per share, on revenues of $1.73 billion, year-over-year gains of 66.7 percent for profits 12 percent for revenues. For 2013, SanDisk recorded huge gains from its previous year, racking up profits of $2.87 billion, or $4.34 a share, on revenues of $6.17 billion.

SV150 market report: VMware and Apple advance, AMD plunges

In Wednesday’s regular trading session, indexes were not as volatile as Silicon Valley’s after-hours action, with small gains and losses common as VMware wrote its biggest check to date.

And the widely watched Standard & Poor’s 500 index: Up 1.06, or 0.06 percent, to 1,844.86

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

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